The Basque Country's Supreme Court follows Catalonia's and grants a worker an additional 30,000 euros in compensation for unfair dismissal

The High Court of Justice of the Basque Country (1040/2024 of 23 April 2024) has endorsed the thesis of the European Social Charter and considers the compensation for unfair dismissal to be insufficient in accordance with the legal criterion of the Workers' Statute. It has therefore ordered an employer to pay an additional compensation of 30,000 euros for the termination of the employment contract. The TSJ of Catalonia was the first to rule in favour of increasing the severance pay for dismissal of a female worker above the maximum set by law.

Alberto Novoa, partner in RocaJunyent's labour law department, states in this Economist & Jurist article that this has a dissuasive effect on employers: ‘Compensation for unfair dismissal should not only compensate the worker, but also dissuade employers from committing abuses. If the compensation is insufficient, it would not fulfil its deterrent function’.

He also considers that in this economic and social context ‘economic and social conditions vary from country to country and region to region. A flexible interpretation of the European Social Charter makes it possible to adapt compensation to local realities'.

For those who are against such a measure, Alberto Novoa points out that ‘there is talk of legal certainty. Maintaining a fixed compensation rate provides legal certainty for both employers and workers. An expansive interpretation could generate uncertainty and difficulties in practical application'.

Another issue he cites is ‘fairness and predictability. Equal treatment of workers and predictability in employment relations are fundamental. A strict interpretation could ensure greater uniformity in compensation’.

And as a third element he points out that it is an additional cost for companies: ‘A significant increase in severance payments could affect the economic viability of companies, especially small and medium-sized ones. This could have negative consequences for employment’.

He stresses that, ‘in general, the Social Court in Spain has adopted a cautious stance with regard to expansive interpretations of the legal system of severance pay. They take into account issues of legal certainty and predictability; fairness and uniformity. Equal treatment of workers is essential'.

‘An expansive interpretation could lead to disparities in compensation depending on the region or the judge hearing the case. Prudence ensures greater uniformity and fairness in the application of the law,’ he says.

Access to the full article (available in Spanish)